Saturday, May 31, 2008

Effective leadership has passion. By passion it does not mean you are loud or flamboyant but something from deep inside. Passion cannot be taught or learned. The best way to be passionate is to hire people who share your excitement for the job at hand.

Energy gives results if there are no compexities, all the bureaucratic layers are done away with.

People become passionate and contribute if they are given the platform to be heard.

Energises

The leader energises, they are energisers. As energisers they inspire, mobilize people to act, and spark others to perform. They do not engage in turf wars, operate in silos, or tolertae backbiting behavior.

People respond to them, and these reponses make them very effective.These people are like gardeners who instead of spreading fertilizers and water spread confidence.

Leadership is the ability to articulate a vision and the ability to get others to act on that vision.

The 4E leader makes sure that good ideas are surfaced celebrated, and acted upon.

Edge

Individual with edge have a competitive spirit and know the value of speed. They are confident ; they know when to green light or red light a project or acquisition.

The effective leaders get the right people on the bus and the wrong people off the bus, and then figure out where to drive it.

The leaders with edge are very similar to the sports stars. They always win whether it is the customers or market place.These leaders can only flourish if you have differentiation. You differentiate these leaders and reward them according to their victories.

Executes

Individual with the 4 E get the things done.They consistently deliver in many cases not only meeting the goal but blowing them away. They realise that the first three Es are of little value unless they are leveraged to produce results.

The leaders, understand that there is no subsitute for achievement. They develop their expertise and do the job better then anyone else. They know that the performance has to be delivered today and not in the future. They do their job better than anyone else before thinking of promotion.

Narayan Murthi -Infosys

Energy to work hard especially during the initial phases of Infosys to build a world class IT company and then not to rest in the laurel but beat one milestone after the another.

Energises - The best performance of Murthi, he has created a vision of the company which will be unique in terms of value system, wealth sharing and quality.

Edge- Infosys has a edge , it is considered to be different, better, smarter than the other IT companies. Thanks to Murthi who has always recognised that the people who are performing, should be differentiated and be rewarded accordingly so much so that the salaries of the certain employees are higher than the Managing director

Execution- Infosys surely by showing the double digit growth, beating the projections on revenue and profit definitely focuses on execution.

WHEN raising money from venture capitalists or angels, you’ll want to meet as many as possible. They won’t all invest, but each time you pitch, you get better. Each time you pitch, you get asked different questions, get different opinions and ideas. It’s worth it to pitch as many people as you can, as often as you can. Some questions will get asked over and over. And you’ll discover those patterns quickly enough and adjust your pitch accordingly. If you have a lessthan-stellar answer to a question that gets asked once or twice, it’s not a big deal. But if your weaker answers are to the most common investor questions, you’ve got a problem. With that in mind, here are some of the more common questions investors will ask:

SO WHAT’S YOUR BUSINESS ALL ABOUT?

The wording of this question will change, but this is the classic “elevator pitch” question. Translation: “In the shortest amount of time possible, grab my interest by the proverbial you-know-whats.” Sell them quick, with something simple and powerful they can remember; and keep reiterating that message throughout your presentation.

WHAT’S THE BARRIER TO ENTRY FOR COMPETITION?

For Web 2.0 startups, this can be tough. The question comes from VCs and angels that might not be as familiar with the overall industry and the ease with which many web applications can be built. They’re looking for a real technological barrier that might not exist. Some answers that might help you skirt this topic: launching big, building a devoted community, key partnerships and/or customers (before launch), we’re cooler than everyone else (this won’t work.) None of these answers are great (for a host of reasons.)

WHAT’S GOING TO STOP BIG MONSTER COMPANY IN YOUR SPACE FROM COPYING YOU?

This is almost identical to Question No. 2 but it’s more commonly asked because there’s always competition. And, it’s usually from the “big bad wolf” company that’s got tons of money, lots of market share, a huge staff and years of experience. For starters, don’t say, “What competition? We don’t have any.” There’s always competition. Secondly, this is a tough question to answer. What is stopping “big bad wolf” company from copying you instantly and smashing you like a bug? Generally, you can argue: We can move more quickly. Big bad wolf is too busy managing what it’s doing to innovate. They’ll acquire us rather than copy us (if you have examples, use them.)

HOW FAR DOES THAT MONEY GET YOU?

Have a good answer to this question. Couch this in product and financial terms, i.e. “It gets us six months past launch, when we expect to be cash flow positive.” The best way to think about this is to calculate how long the money will last if you earn zero revenue. Count backwards by four-six months and that will tell you when you need to start the process of raising more money. If the money is only going to last you four-six months, you need to start looking for more money almost immediately (which isn’t a pleasant thought.)

WHY ARE YOU RAISING THE MONEY YOU WANT TO RAISE?

The amount you’re asking for is critical. Make sure you’ve done your financial homework. Don’t tell them your numbers are conservative, just explain to them how you arrived at them.

DO YOU HAVE ANY CUSTOMERS? HAVE YOU SPOKEN TO POTENTIAL CUSTOMERS?

Investors are looking for traction, or at least the inkling of traction. As soon as possible, try and get a few potential customers to say, “Sounds interesting.” You might even use them as references. This raises the comfort level for investors and helps answer the question, “What’s the market?”

WHAT’S YOUR MARKETING STRATEGY?

For early stage companies this is a very tough question. Chances are “just getting to freaking launch” is what you’re thinking, but that’s not good enough. And “launch big” is equally uninspiring. Think about presenting a timeline of events and customer acquisition numbers that you’re anticipating, tied to marketing. Throw in a variety of strategies that you’re going to do or researching. Marketing will be critical to your success, so you better plan for it sooner rather than later.

WHAT ARE YOU CODING IN?

Investors do want technical details. This is an easy question to answer at least (assuming you know!)

HOW ARE YOU HANDLING TECHNOLOGICAL INFRASTRUCTURE FOR SCALING?

Investors want technical details. They want to know that you’ve thought about the behindthe-scenes technology to support your system. When customers are signing up faster than you can process their credit cards (don’t let that happen!), will the system stay running at a reasonable speed? The further you get along in the process with investors, the more technical details they’ll want.

WHAT’S THE TEAM LOOK LIKE? WHAT ARE YOUR BACKGROUNDS?

Investors want to know the backgrounds of the founders. If you’ve got people on staff, they’ll want to know who, why you hired those people, and who else (and how many) you need to bring on board. They’ll want to know how quickly you expect to grow the team over time as well. Although there are common questions you’ll get from venture capitalists and angel investors, what’s more fascinating is that each investor will ask different questions. You can’t be prepared for every question, but even if you get new ones, the more comfortable you are pitching (because you’ve done it so many times), the better.

Thursday, May 29, 2008

His story is an inspiration for millions. A self-made entrepreneur, his mission is to help the poor through job creation. E Sarathbabu hit the headlines after he rejected several high profile job offers from various MNCs after he passed out of IIM, Ahmedabad two years ago.

He instead started a catering business of his own, inspired by his mother who once sold idlis on the pavements of Chennai, worked as an ayah in an Anganvadi to educate him and his siblings. As a child, he also sold idlis in the slum where he lived. "We talk about India shining and India growing, but we should ensure that people do not die of hunger. We can be a developed country but we should not leave the poor people behind. I am worried for them because I know what hunger is and I still remember the days I was hungry," says Sarathbabu.

In August 2006, Sarathbabu's entrepreneurial dream came true with Foodking. He had no personal ambition but wanted to buy a house and a car for his mother. He has bought a car but is yet to buy a house for his mother. The "foodking" still lives in the same hut in Madipakkam in Chennai. Today, Foodking has six units and 200 employees, and the turnover of the company is Rs.32 lakh a month. But it has not been a bed of roses for Sarathbabu. After struggling and making losses in the first year, he managed a turnaround in 2007.

How has his experience as a 'Foodking' been in the last two years? Sarathbabu shares the trial and tribulations of an exciting and challenging job in an interview with Shobha Warrier.

A Tough Beginning

As I am a first generation entrepreneur, the first year was very challenging. I had a loan of Rs 20 lakh by the end of first year. I had no experience in handling people in business, and it was difficult to identify the right people. Though I made losses in the first year, not even once did I regret my decision of not accepting the offers from MNCs and starting an enterprise of my own. I looked at my losses as a learning experience. I was confident that I would be successful one day.

Sleeping on the railway platform

My first unit was at IIM, Ahmedabad. When we started our second unit in October 2006, I thought now I would start making money. But I made losses of around Rs 2000 a day. A first generation entrepreneur cannot afford such a loss. But I worked really hard, working till 3 a.m. in the morning. What reduced my losses were the birthday party offers.

I started the third unit again in Ahmedabad but it also made losses. All my units were cafeteria and I understood then that the small cafeterias do not work; I needed huge volumes to work. My friends who were extremely supportive in the first year when things were difficult for me. I had taken loans from my IIM-A friends. They were earning very well.

In December 2006, an IIM Ahmedabad alumni event took place in Mumbai and I decided to go there mainly to get a contract. I was hopeful of getting it. I also knew that if I got the huge contract, I would come out of all the losses I had been incurring.

I booked my train ticket from Ahmedabad to Mumbai for Rs 300 and I had Rs 200 in my hand. As the meet went on till late at night, I could reach the station only at midnight. I missed the train. I decided to sit on the platform till the morning and travel by the next train in the morning. I didn't have the money to check into a hotel. I didn't want to disturb any of my friends so late at night.

It was an unforgettable night as I was even shoved off by policemen from the platform. It was quite insulting and embarrassing. After two hours, people started moving in, I also went in.

A man who sat next to me on the platform gave me a newspaper so that I could sleep. I spread the newspaper and slept on the platform! I sleep well. I got my ticket refund in the morning and went back to Ahmedabad. And, luck did not favour me, I didn't get the contract.

In March 2007, I got an offer to start a unit at BITS, Pilani (Sarathbabu was an alumnus of BITS, Pilani). That was the first medium break for me. For the first time, I started making profits there though the other units continued to make losses. The reason for our success at BITS, Pilani was the volume; there were more students and there was a need for a unit like ours while in Ahmedabad, they have at least a hundred options.

If I made Rs 5000 a day at Ahmedabad in two shifts, here I made Rs 15,000 a day. BITS, Pilani unit gave me the confidence to move on. Unless you make money, you can't be confident in business.

What changed my fortune

When all my friends who worked for various MNCs made good money every month and I made losses with my venture. But I kept telling myself, I am moving in the right direction to reach my ambition and vision. My dream was to provide employment and I was doing just that. I continued to work till 3 a.m. but I never felt tired.

Through BITS, Pilani, I got the BITS, Goa contract and that was the biggest break for me. It was not a cafeteria like the earlier ones but the dining hall that we got. We had to feed 1300 students. We started our operations in July 2007. At Rs 50, for 1300 students, our sales was Rs 65,000 per day. We soon started making a profit of Rs 10 to 15,000 a day. Around 60 to 70 people work there. I gave the charge of the Ahmedabad operations to one of my managers and moved to Goa.

I was still in debt by Rs 15-20 lakhs but I knew BITS, Goa would keep my dream alive. Within six months of starting our operations in Goa, I repaid all my debt.

I was called to give a speech at the SRM Deemed University. After the speech, I asked the Chancellor, can you give me an opportunity to serve in your campus? He said, "If not you, to whom will I give such an opportunity?" It's a food court but a big one, similar to the one at BITS, Pilani. There are around 17,000 students there.

Now, I have the BITS, Hyderabad contract, ready to start in July 2008. Other than the six units, I have approached a few more universities and corporate houses too. In the first year, I had made a loss of Rs 25 lakh. Right now, we have a turnover of Rs 32 lakh every month, which works out to 3.5 crore (Rs 35 million) a year.

I have hired about 200 people. Indirectly, we touch the lives of around 1000 people. By this year end, we will have 500 people working for us. Only 10% of my workers are educated, the rest are uneducated. I want to make a change in their lives. If they have any problem, I will take care of it. We support the marriages and education of poor families. We are paying more to the employees as the company is doing well. Now that the foundation is strong, I plan to have ten units and a turnover of Rs 20 crore (Rs 200 million) turnover by next year

His advice: Never give up!

In the last two years, I have given more than 120 lectures in various institutions in India. When I got the first opportunity to speak, I thought God had given me an opportunity to encourage or inspire entrepreneurs. When youngsters tell me they are inspired, I feel good.

When you just dish out the theory, nobody believes you. But when you do it, they believe you. What I tell them is based on my own experiences.When I thought of starting a company, I felt India needed 100 people like Narayana Murthy and Ambani. If 100 such people support 2 lakh people each, imagine how many Indians get supported.

Entrepreneurship is needed to uplift the poor. It is not easy to be an entrepreneur, especially a first generation entrepreneur.There will be lots of challenges in the beginning but you should learn to look for the light at the end of the tunnel.Never give up even if there are hurdles. There are many who give up within a week.You need determination and a tough mind to cross the initial hurdles.If you are starting without much money, you should not have any overhead expenses.

He still lives in the same hut

As I am in the food business, I know how much the price of every food item has gone up. Many people will languish in poverty because of inflation. Had my mother been working as an Anganvadi ayah today and earning Rs 1500, she would not have been able to feed us and educate us.

On the one side, we talk about India shining and India growing, but we should ensure that people do not die of hunger. We can be a developed country but we should not leave the poor people behind. I am worried for them because I know what hunger is and I still remember the days I was hungry. That is why I feel it is our responsibility to take care of them.

I wanted to buy a car and a house for my mother. I bought a car first, not a house. I still live in the same house, the same hut. I can build a house right now but I want my business to grow a little more. I feel good in the hut; that's where I get my energy, that's where I lived 25 years of my life. I want to remind myself that the money and fame should not take me away from what I want to achieve.

But within six months, I will build a good house for my mother. Her only advice to me is, don't waste money.

Till I was in the 10th, there was no electricity in my house. I had to sit near the kerosene lamp and concentrate hard. That's how I learnt to concentrate.The two year journey has been very enriching. It seems like a 20-year journey for me. I was living every moment of the two years, from sleeping on the Mumbai railway station platform to this level.

Wednesday, May 28, 2008

Creating Quality IT Workforce Has Been A Passion For Seed Infotech Founders

A JOB as a scientist in the Defence Research and Development Organisation is not just challenging, but prestigious and safe too. At 32, Narendra Barhate could have continued in the cushy position and retired. But in 1994, he opted to take the risky path of entrepreneurship. Thus was born Seed Infotech, an education and training firm for information technology professionals, mainly in Maharashtra.

“I felt constrained at work,” he recalls. So did his friend Shrikant Rasane, who joined him in the venture. “At that time, the software industry was just starting to take off. There was also a need for trained manpower and bridging the gap between what companies needed and the quality of manpower colleges were able provide to them.” The duo eyed this opportunity and weighed their options. They could start a software company or a training firm. “We chose training,” said Mr Barhate. They roped in two more friends and started Seed with a contribution of Rs 25,000 each.

The first generation entrepreneur was determined not to let his inexperience come in the way of building a successful company. “The first couple of years were not difficult because we were small in number. But as we grew, we started realising the importance of financial discipline and systems and process. We got around this by hiring people with appropriate skills in these areas.” With formidable names such as NIIT and Aptech dominating the business, he also realised the need for continually refreshing business strategy. “We learnt the importance of planning ahead for five years, ten years.”

The first big test for the company’s mettle came just after the turn of the century, when many peers went down in the technology slump. “In 2002, the whole market was sinking. But with the support of well-wishers, we were able to survive it. No bank was willing to lend us money and we needed money to keep the business going. We were able to take credit from family and relatives and tide over the crisis. We suffered losses only for that year, but we came out of it the next year itself,” said Mr Barhate.

Luckily, Seed already had a business to train technical people in Japanese language skills. When everything else dried up, this business continued to do well. Though the segment’s share in overall revenues has fallen now, Mr Barhate fondly recalls its role in sustaining the company during that lean period.

The company provides software training to graduates and employees of corporate customers. It also runs a finishing school, which rounds up the individual with soft skills. Top names like Infosys Technologies and Cognizant are among its 250 or so clients. Corporate business accounts for a fourth of revenues.

Mr Barhate also said the company was saved from further trouble in the downturn also because it had not spread itself thin. The institution had been focusing on Maharashtra, especially its base in Pune, one of the country’s technology hubs. It certainly had wanted to expand, but took a cautious approach when business turned patchy. “That was the time we were thinking of expanding beyond Maharashtra. It is lucky we didn’t,” said Mr Barhate.

Today, with a much larger IT education industry and a steady stream of students, Seed Infotech feels it’s ready for a national presence. Within three years, it plans to be in major cities such as Bangalore, Chennai and Hyderabad andreach Rs 100 crore in revenues by 2010, about two-and-a-half times the current level.

It is also expanding the scope of its training programmes. “Usually, corporates also require some hand-holding after we have provided training. We plan to provide tool-based consulting and some hand-holding for project readiness,” said Mr Barhate. Further, it plans to enter distance learning and niche training areas in engineering services. All these plans are part of a strategic business plan being drawn up by a consultant. Having put one lakh students through Seed Infotech’s portals, the business of education has proven to be the education on business for this scientist.

Article Resource:Author: N Shivapriya is the cheif editor in the Economic Times, Mumbai and the article appeared in one of their successful columns called "Starship Enterprise.

Tuesday, May 27, 2008

When A Rookie Entrepreneur Is Not Yet Ready For Venture Capital Funding,It Is The Angel Investor Who Gives That Person Wings.

BUSINESS aspirant Madan Pandit quit his job in 2004 and roamed Bangalore’s cyber cafes to build the prototype of an online search analytics tool, which he later converted into his first venture. When he needed funds for the start-up, he didn’t consider venture capital (VC) firms but approached well-known angel investor Kanwaljit Singh. With an unproven technology and hardly a business model to speak of, he still succeeded in getting the funding.

On the other hand, Phaninder Sama, cofounder of Redbus.in, an online bus ticketing site, ran his new business for around three months before making a venture capital pitch. He and his partners skipped the angel step altogether. They, too, got the money. In fact, the new image acquired by the VC connection helped them hire high-class talent.Two entrepreneurs. Two radically opposite strategies. And both are happy with their respective choices today. So, how does one tell whether a new business should go in for angel investment or venture capital funding? It is indeed a crucial choice for a small company, because if an entrepreneur is not yet ready for venture capital, it is pointless to waste time pitching the business to VCs and more profitable to approach an angel.

Angel investors, often, are successful entrepreneurs themselves, fondly reliving their early struggles and wanting to mentor young minds. Some think of investments in start-ups as a way to give back to society. Others, who left India and made it big in the West, want to shrink the country’s economic growth curve with the stimulus their money would bring to entrepreneurship. Thus, they are driven first by the beauty of new ideas and only then, by return on investment. They can put in as little as a few lakhs of rupees to as much as several crores.

Venture capital funds, on the contrary, are professionally-driven enterprises which pool in resources from their investors and channel them into ideas that are more likely to succeed. They often look for a proven, or at least a well thought-out business model, cash flow, management bandwidth and so on. They also look to invest a sizeable amount of money, say a few million dollars.

“By default, you would always want to go in for VC,” Suvir Sujan, a venture capitalist with Nexus India Capital and a former angel investor, said. “VCs can get you further with capital. With an angel, you could get stuck, because there is only so much funding an angel can provide. After all, he is just one individual. The VC offers the stability of an institution.” However, an angel would be the option when VCs are telling you it is too early to invest in your company, he added.

Venture capital funds can be of immense help in building a company to maturity, after the business has cleared the initial hurdle of getting on the track. In an increasingly globalised world, marketing and hiring the best talent can be expensive and large investments are called for in the growth stage. Angel investors don’t have the financial muscle to shepherd their investee companies beyond a point. So, in reality, the two investors play for stakes in different stages of entrepreneurship, but their roles often overlap. To choose between the two, a thumb rule for an entrepreneur could be the stage at which a start-up finds itself. The earlier the stage, the more inexperienced the entrepreneur, higher is the need for angel investment support. Remember, the angel is likely to take more personal interest in the business than a VC could possibly do.

Madan Pandit recalls how he stumbled on Kanwaljit Singh at a social gathering. Talking to him, Pandit realised the investor was passionate and hungry for ideas such as his own and that he would be willing to bet on a horse that was yet to run a race. They continued to remain in touch after their first meeting. Eventually, Mr Singh took Mr Pandit under his wings. “I didn’t completely understand what he did. All I had was the framework of understanding as to why it would work. I also knew for sure that he had the relevant experience and that he had his sense of direction clear in his mind,” Mr Singh said. Pandit’s offering, which he calls a ‘post-Google solution’, is aimed at enabling analysis of information thrown up in a search so that the results could be used more effectively. This new thought was put on a firmer business footing with the help of Mr Singh’s association.

His business, just an idea at that time, could have been rejected by venture capital funds as too small and unattractive. They might have been discouraged by his lack of experience or doubted the viability of the product.

The community of angel investors is expanding rapidly in India and it is time entrepreneurs benefited from this class of patrons, experts said.

Raising venture capital is often a difficult task even for companies with a proof of concept. For the rookie, it can be a frustrating experience to get rejected repeatedly. Just the fire-inthe-belly won’t light up a VC’s imagination and the funding agency may reject an application on the slightest doubt. After all, VC panelists have to refer back to hard-nosed investment committees for approvals.

On the other hand, angel investors often work on a hunch. “They can take more risks as they are spending their own money. Angels invest in entrepreneurs because they like to do it. So it is okay if the entrepreneur does not have a revenue model,” said The Indus Entrepreneurs-Delhi president Saurabh Srivastava. Processes, balance sheet and market share, the staple diet of venture capitalists, are not so central to an angel investor’s strategy. Bharati Jacob, partner with SeedFund and also a former angel, said she invests in people who have the capacity to build a business, rather than on their revenue models and marketing strategy. “As an angel, I did invest in companies because I trusted the people. I didn’t necessarily know the sector as well.”

There are a number of ways to seek out an angel. The National Entrepreneurial Network’s (NEN) Online Resource presents a list of angel investors in India and simplifies the search process down to three points: 1) Ask everyone you know. This could include friends, family, acquaintances and even ex-bosses. 2) Research, and then cold call. You might find a potential angel from his blog or a news article or maybe someone who has had experience in a related industry. 3) Make use of existing forums: It is easier than ever before to be an entrepreneur in India. There are specific groups like NEN and TiE that have brought together experienced entrepreneurs to mentor and network freshers. These organisations can help hook up a young entrepreneur with potential angels. There are also numerous events conducted by organisations like CII and Ficci.

But each external investment comes at a price. You fork out a chunk of your company to the investor, angel or VC. An entrepreneur must be careful in how much stake he or she is ready to give away. Mohit Dubey of Bhopal learnt it only much later. His idea was to set up a website that would simplify the procedure of buying a car, new or used. His firm, carwale.com, started rolling with Rs 4 lakh given to him by a former boss and mentor, and raised Rs 12 lakh soon after.

Back then, he ended up surrendering a large chunk of his company for the initial investment. In retrospect, he thinks it may have been too much. Nevertheless, he looks at the brighter side and calls it a learning process. “If I were to do it all over again, I would have given out a lot less stake to the investors and consultants. If at all I would give out such a large stake, I would give it on the condition of performance.”

Article Resource:Author: Jacob Cherian is the Chief Editor in the The Economic Times, Mumbai and the article appeared in one of their successful columns on Entrepreneurship/Start-ups called "Starship Enterprise".

Sunday, May 25, 2008

It’s a fact that companies are built by people, and the best people build the best and most profitable companies. Put simply, great employees may cost you 20 to 30% more in wages, but they can be twice as productive as mediocre employees. Invest in good people.

PLACE HIGH URGENCY IN EVERYTHING YOU DO

Always do everything you can today. Too many people treat their businesses as 9-to-5 jobs. Never put something off until tomorrow if you can do it right now.

GET CUSTOMERS COMING BACK

The road to profitability is through repeat business. Too few business owners set themselves up for long-term success. Your business grows when you add regular new customers on top of existing regular customers. Think of it this way: What if every customer you ever got stayed for life? How many regular buyers would you have?

MAKE DECISIONS QUICKLY

New companies don’t have the time or resources to stand still. General H Norman Schwarzkopf once said, “When placed in command, take charge.” It’s better to make a decision and move than to stand still.

DELIVER MORE THAN YOU PROMISE

If you tell a customer it’ll be three days, deliver in two. If you think it’ll be two hours, say three hours and surprise them. This is the best form of marketing ever.

PRICE YOURSELF FOR PROFIT

Don’t ever be the cheapest. You’re the little guy; you don’t have economies of scale. Big companies can make up in volume what they lack in margin. You can’t.

NEVER SPEND A RUPEE YOU DON’T HAVE TO

You don’t need a new desk, you need a cheap desk. Too many new business owners go and buy the best stuff because they think image is important. Listen, when you get profitable, you can have a big mahogany desk. Right now, just get a desk.

SET A BIG VISION

Start Small, Finish Big should be the title of your book. Don’t aim to be the best dog trainer in your city — aim to be the best in the country. Remember, building a business is a 10-year plan, not a one-year plan.

MARKETING IS MATH

Don’t ever let an advertising sales representative teach you anything about marketing. They will say dumb things like, “Half your advertising works and half doesn’t — and you’ll never know which half.” Rubbish. If an ad that costs Rs 100 gets you Rs 100 back in profit, it’s a good ad. One other tip: Image advertising doesn’t make sense when you’re not yet profitable.

LEARN TO SELL

There’s nothing worse than a business owner who isn’t willing to sell — or even learn to sell. No company makes money unless someone sells something, and you can’t just rely on people you hire to do the selling for you. If you want to grow a profitable business, you’ve got to learn sales yourself.

IT’S SIMPLER THAN YOU THINK

Before most people even go into business, they work it up to be far more complex than it really is. Business is very simple: Sell at a profit and keep at it. Overcomplicating the process won’t help anyone. If your business seems too complex, it probably is — so make it simple and watch yourself succeed.

Saturday, May 24, 2008

Richard's first big challenge came when as a five years old kid he wanted to swim in a beach but could not do so as he did not know how to swim. Inspite of trying his best , suffering cold water and swallowing whole lot of sea water, he lost out the bet with his aunt who offered ten shillings if he could learn swimming by the end of the holiday.

While return he was obviously very unhappy as he hated losing when he saw a river, he decided to give a one last try and pleaded his father to stop the car. The river looked deep and fast, running over rocks but he dared and took the risk. With active encouragement from his parents he stepped into the river , almost got drowned before he relaxed and started floating and then swimming awkwardly and thus won the bet.

Richard "virgin" Branson.

Stand on your own feet

His first lesson on self sufficiency was when he was four years old . While on his way back from somewhere his mother stopped the car at a little distance from the house and told him to get down and find his way home across the field.

Richard loved these challenges and these lessons from his parents became tougher ,once he was asked to bicycle 50 miles to south coast with only a map for guidance when he was 12 years old .These early lessons made him strong and rely on his own self thus making him independent.

When everything seems lost

Richard found out the easy way of making money by selling records domestically which were meant for exports. He started making an enormous profit as tax was not paid on these music records but this was illegal. He was caught and thrown into the prison. He could somehow escape by agreeing to pay penalty which was three times the illegal profit which he has made.

He had no money but slogged without moaning and paid the penalty in installments in three years. He realized that the reputation is everything and his advise to all new business startups is " be fair in all the dealing, do not cheat but aim to win."

There are some character traits that cannot be taught in Customer Service..If we could, we would because it would make the whole world a better place, not just Customer Service. We can't, therefore we work with people whom we believe to most exemplify these traits. Here are 5 you cannot teach.

1.Enthusiasm.

We see it, we feel it and boy, do we wish everyone had it.

Many people don't though. It is often reflected in their faces when a request is made and reinforced with a sullen "just a moment" that does nothing to help us believe that we are about to receive a Service which we so desperately hope is better than what Mr. or Ms. Sullen face has just prefaced us with.

Enthusiasm is infectious, contagious and outright fun. It seems the Enthusiast is everywhere, ready and willing to do whatever it takes to make sure that we have a fantastic Customer Service experience. It is reflected by the pride they take in doing the job right, the care they take making sure everything is just so and the delivery of "Is there anything else I can do for you Mr. or Ms. Customer?"

The Enthusiast is nearly extinct these days. The victim of "Faster, More, Cheaper" Customer Service.

Are you exemplifying "Faster, More, Cheaper" or are you trying to grow Customer Service Enthusiasts?

2.Happiness.

A feeling of pleasure. I have come to believe that Happiness is sometimes misused for the word Enlightened.

I know, now you think I am really off my meds. Let me ask you something. Have you ever met a person who was Happy? I mean really, really Happy? Really, when? Where do you think "Happy Hour" comes from? My point is that when people feel Happy, it leads to the ending of Happiness, or a state of Unhappiness. In other words, there is a limit.

I don't think there can be a limit to Enlightenment. Either way you think about it, it is not something you can teach. You can feel it. You can see it when another person really has it. You just can't teach someone to be Happy or Enlightened. They have to find it themselves.

3.Commitment.

The feeling one has when one decides to do something no matter the cost or the journey. The ability to see it to the end. People who have commitment are not easily swayed. They keep putting one foot in front of the other, keeping their eye on the prize, the goal, the end.

Oh, they have trials and tribulations, and when you ask them about it, they shrug and say things like "That's the way we do it" or "It needed to be done." They have little concern or care for the thoughts of others who can't see the world through their eyes. They shrug and say "It's got to get done, and I'm the person to do it." You can't teach that.

4.Belief.

The thought that someone feels completely, through and through that resonates deep inside them and tells them that they are on the right path. They don't need your beliefs, and are quite content to let you have yours.

Once it is felt between a group of people, it sings to everyone's heart in that group. A drumbeat that is felt by and played by all. It brings a natural power to a person that is unquenchable and unwavering. When all else is in doubt it is Belief that carries a person through.

I have experienced total Belief and a loss of Belief and I can tell you that when there is a loss of Belief, it literally can crush a soul. It's at these times that a person has to find that small spark, that ignites and starts the fire anew. You can't teach that.

5.Attitude.

Among all, I really want to have the ability to teach Attitude. You could point out to someone what Attitude looks like and say things like "He/She has a great Attitude, you would do well to be like this" and the person would say "Oh, I see. No problem. Attitude is adjusted to maximum. Thanks." And it would be.

Or say something like "Study this book, read chapters 3 and 4, answer the questions at the end of the chapters and you will have the Attitude you need to make it through life." Right. The world would be a much more interesting place if all of our Attitudes where in sync and working towards a common goal.

" Imagine," as someone once said. You can't teach Attitude in Customer Service.

If you are trying to teach one of these to your personnel in the hope that they will morph in Customer Service Professionals, forget it. You have a better chance of seeing Santa Claus, The Tooth Fairy and The Easter Bunny playing ball on your front lawn one morning.

Concentrate on finding those people who best demonstrate these traits.

Help them grow their own Enthusiasm, Happiness, Commitment, Belief and Attitude. You will be much happier with the results. (Or Enlightened).

This article is written with the hope that you do something with the thoughts and ideas presented here. Take action and make a difference.

Reference:Leonard BuchholzAbout the AuthorLeonard Buchholz is a Certified Trainer, Speaker and Author. Seminars include subjects like Customer Service, Management and Communications. Known for "High Touch" seminars, participants have takeaways that include 3 immediate goals and long term learning. Leonard is also a dynamic Keynote speaker that can launch your event with enthusiasm and charisma.

If you go into any mall watch out for Koutons retail outlets.Why ? Let me ask you a question , which apparel brand has the highest number of exclusive retail outlets?

It is not Levis or Benneton or Arrow , it is Koutons . It has 1000 exclusive stores almost 4 times of any other apparel brand stores. An impossible target for even big spending MNCs.

This is the story of Mr. D.P. S. Kohli. In 1984 sikh riots his television manufacturing venture called Apollo Television was destroyed. Kohli was forced to work as an insurance surveyor to pay off his loans. But his spirit was not broken , he was determined to rise again and he started his jeans manufacturing business, called Charlie Creations, with his brother-in-law in 1991.

He has learnt his lessons and decided to sell from his own exclusive stores so that he has control on his brands. The Koutons story reveals how much a regional brand can grow in a short span of 15 years competing with major corporate brands. Koutons is totally consumer focussed and depends on brand loyalty for it's tremendous expansion and gowth.

The entire idea of Koutons is to give the people the sense of satisfaction and feel that they are owning an international quality brand.Koutons often come up with crazy schemes( 50 % +40 % off) to introduce themselves, or to make the initial push for the consumers to try their brand.Koutons Retail India Ltd. (KRIL currently has a network of over 1000 exclusive brand outlets of total 8.4 lakh sq ft spread across 221 cities in India.

Koutons was Nominated for "Brand of the Year - Men's Casual Wear (Large)" by the Clothing Manufacturers Association of India.

Sunday, May 18, 2008

Venture capital funds are shedding their single-minded focus on technology startups and looking at non-tech sectors such as food & retail.

THE dotcom boom had a lasting impact on the fund-raising scene in India. While bank loans were the primary source of capital earlier and venture capital an increasingly attractive option later, it was during the time of the internet bubble that the rules of the game changed forever. It was not uncommon for venture capitalists to decide funding over lunch with an entrepreneur, sometimes before the plates had been cleared. This led to a mushrooming of tech ventures and the eventual failures, but it also nurtured some very innovative businesses. The losers in this race, some say, were the entrepreneurs looking to start businesses in conventional sectors without the allure of the World Wide Web. Only a small proportion of these business aspirants got funding and others had to make to do with money from friends and banks.

Not any more. Funding for technology startups has reached a more mature stage and venture capital houses now take a much more discerning view of business models. A mere website will not get money now. Old world concepts such as cash flow are back in the reckoning. And early stage investors are also beginning to attach more importance to non-tech ventures, especially the evergreen ones such as food and sectors gaining from the country’s economic rise such as retail. Other sectors including alternative energy, whose importance will be understood in the coming years, are also finding favour.

Arun Natarajan of Venture Intelligence, which tracking the funding industry, says that there has been a very clear shift among the investing community in the last three years with 20% of the VC funds going into the non-tech entrepreneurs. “Three years ago if somebody talked about funding an non-tech entrepreneur, one would find it strange,” but now it is increasingly becoming part of the strategy of a fund provider, he says.

Retail chain Subhiksha was an early bird, winning capital support from ICICI Venture seven years ago. It has obviously been a successful bet for the investor. This sort of strategy could help VCs mitigate some of the risks involved in excessive reliance on technology businesses. It also opens up vistas to sectors that will rule the next decade, just as tech businesses did in the current one.

India’s growing cities are bustling with examples of the new investment paradigm. The Shanghai-like skyline of Gurgaon is peppered with the name boards of Yo China, a Chinese fast food chain that claims to offer affordable eating. Its success in raising capital from Matrix will enthuse fast food entrepreneurs (or wannabes?) to try their hand at their own ventures too.

In the southern city of Bangalore, where technology start-ups are not far behind autorickshaws and flower vendors in number, fast food chain KaatiZone is rolling chappatis for the rushhour commuter. It packs the common Indian bread varieties with tasty stuffings and sells them under a stand-eat-and-run model. Erasmic Investment Ventures, which provided early capital for this chain, is helping it scale up the number not just in Bangalore but in other cities as well. KaatiZone’s founder Kiran Nadkarni says he wants to set up a nation-wide network with international standards.He says a pleasant ambience, good quality food and hygiene should be able to attract the increasingly discerning Indian customer. “Food business is a low entry barrier segment but with high mortality,” he says.

Mom and pop stores have been the mainstay for the Indian household for decades, but this is the age of organised retailing. With big names such as Reliance and Bharti becoming shopkeepers, an ecosystem of vendors serving them has also been created. Like retail outfit firm Dovetail which is riding on the burgeoning demand for quality shopping space. Erasmic has backed this venture also.

Things are just beginning to hot up for Dovetails, says managing director S Sundar. The company had a turnover of Rs 15 crore in 2005-06 and Rs 25 crore in 2006-07. Theheady pace of growth currently sustains a staff of 150, but the orders are growing the day, putting pressure on him to expand faster. “Sometimes our customer asks usto provide the fitouts for 50,000 sq ft in a week’s time.” Further, the company is also looking to diversify into designer furniture.

Erasmic’s Prashant Prakash says venture capital support has been important to Kaati-Zone and Dovetail not only for the money but also the rigour of corporate discipline that the relationship brought to the managements.

So what kind of non-tech companies attract venture capital funding?Right now, the hottest thing going around is the India story. The economic upsurge, the loose cash that middle class households want to be seen burning and a furious expansion of consumption are all the underlying themes that VCs want to take advantage of. Businesses built around the domestic market, identifying a niche pain point to address and having the ability to scale up are likely to get the cheque. While investors may look at any business model worth pursuing, service oriented businesses with less capital needs are the chosen flavour.In technology start-ups, the exit is often an acquisition or a public offer of shares. This could happen in several years or just in a few months. But in non-tech ventures, the rules are slightly different. Venture capital funds play for the medium term here. A three to five year horizon is common. So, it is not enough just to have a cool idea (like a video uploading site or a social networking service). The entrepreneur also has to make that cool idea work, build size and consolidate revenues and take the business mainstream.These are still early days for non-technology businesses in the age of venture capital funding and the key bridge to be crossed is true corporatisation in terms of processes and systems, says Kanwaljit Singh of Helion Ventures. Many of these businesses are not new to the country, but have been run in the traditional, unorganised manner for years. To develop modern business models for these businesses and bringing in innovation and higher quality would be a challenge. There are many steps that these new businesses will have to go through before being gaining full acceptance among the VC community.Singh says education and health sectors, besides food and retail, could be the areas that VCs would be watching out for great ideas to come from.

As the world’s liplock with technology and internet easing a bit, both entrepreneurs and investors are taking more notice of other sectors. The time was never as ripe as it is now, with the economy booming and rules liberalised. From now on, all it takes is a flurry of ideas that will change the way we eat, shop, learn and live.

Article Resource:Author: Thimmaya Poojary is the Chief Editor in the The Economic Times, Mumbai and the article appeared in one of their successful columns on Entrepreneurship/Start-ups called "Starship Enterprise".

FOR years, calling an ambulance in India has been a painful experience for those needing emergency care and their dear ones. An eternal wait would be followed by the visit of a rickety vehicle lacking much sophistication beyond a bed and siren. Apathetic drivers on the road would ignore the vehicle as they nudge ahead in traffic jams and the golden hour would often be lost before reaching the gates of the hospital. Death would be blamed on god and everything would be back to square one. And nobody did anything about it. Until two years ago.

Then, two engineers without any knowledge of automobiles gave up their engineering careers with German firm Dragger and started selling well-equipped ambulances, in which emergency treatment could be started as soon as the patient is taken aboard. It was a new concept and hard to sell initially. But with their relentless marketing, the duo have made hospitals see the value of treatment on the go and made their startup — Aeon Medical Services — a preferred name among healthcare institutions in the country.

Ranjan Roy and Abani Tripathi, the entrepreneurs, say most ambulances in India are merely passenger transport vehicles and are inefficient in the task of handling the first hour after an emergency. “In most ambulances, there is only an oxygen mask and few other equipment which are not enough to start point of care treatment by emergency response units,” Mr Roy says. Aeon, on the other hand, buys vehicles, imports equipment from Europe and builds integrated ambulances for intensive care, trauma and cardiac care applications. A patient being taken on one of these vehicles would be getting targeted, specialised emergency treatment even in the midst of a traffic bottleneck.

Ranjan Roy Founder, Aeon Medical Services

“Considering the traffic situation in a city like Mumbai or Delhi, if a patient has to go from Borivli to Asian Heart Institute in Bandra, it takes at least one hour. We fit our ambulances with specialised medical equipment such as cardiac revivers and other such type of equipment as is mostly found in ambulances abroad. What this does is that it allows the emergency medical personnel to start the treatment immediately thus improving chances for survival for the patient,” says Mr Roy.

Roy and Tripathi founded the company in late 2005, tapping into a market that was largely dominated by garage owners and local mechanics. “When we entered the market, more than 60% of the industry was unorganised. Doctors and hospitals that wanted specialised ambulances, had no choice but to go to a local auto body-builder to get their medical equipment fitted in the body of a vehicle mostly, a tempo or a large-ish jeep. Moreover, the garage owner would not have much knowledge about medical standards nor were they interested about what are the medical requirements are for an emergency response vehicle. Thus providing doctors with a shabbily made vehicle,” recalls Mr Roy.

Companies such as Tata Motors, Eicher and Bajaj Tempo do offer vehicles that can be converted into ambulances, but selling fully-appointed ambulances has never attracted them as a business. That’s where the two engineers found their opportunity. The medical fraternity was on the look for standardised vehicles matching the quality of those running in the advanced world. Tripathi and Roy used their European connection from Dragger and started sourcing equipment from Italy’s Spencer. “But this was not the tough part. Since both us have biomedical background, we knew where to look for medical equipment, but knowledge about the auto industry was as good as anybody else in the country,” Mr Roy says.

Undeterred, they decided to put up a fabrication unit in Pitampur, an automobile manufacturing hub. “The decision to have a facility in Pitampur proved to a good one in the long run, as we could then source our ambulance bodies from auto sector heavyweights like Tata Motors and Eicher,” Mr Roy adds.

Aeon has already bagged many high-profile customers. Wockhardt group accounted for nearly Rs 7.5 crore in its fiscal 2006-07 revenues. Aeon also services other clients like the Apollo Hospital in Calcutta and Satyam Group’s EMRI in Andhra Pradesh. But the ride for Aeon was not always smooth for Tripathi and Roy. “Getting the right people was a big problem for us. For not only did we need people with the right skill set, we needed them to shift lock stock and barrel to Pitampur,” says Mr Roy. They recruited garage mechanics from Kolkata, Mumbai and North India and trained them.

The customers, too, needed a lot convincing for buying their products due to cheaper competition from local vendors. “We had to convince our customers really hard to buy into our vehicles despite the higher price tag,” says Mr Roy. The local vendors were able to sell at nearly half their prices.

Surprisingly, money was never a problem for these two professionals. Friends chipped in to bolster the starting capital. Aeon was started with an investment of Rs 2 crore including an equity investment of Rs 8 lakh from the promoters, while the rest being in the form of loans from financial institutions and banks. The market for specialised ambulances and medical equipment is still nascent. Mr Roy says that the market for basic life support vehicles is around 500 per year priced at Rs 15 lakh per vehicle while that for advanced life support vehicles is also 500 vehicles per year but priced at Rs 20 lakh per car. Bulk of the business for Aeon now comes, not from hospitals but from emergency service providers like EMRI and Chikitsa.

Now Roy and Tripathi want to bring disaster management portfolio under Aeon’s wings. They are also looking to scale up their pan-India presence. They plan a joint venture with an European firm to trade in medical equipment in India. “We have now trained our guns on Mumbai’s disaster management cell and other such government units across the country. The 7/11 blasts in Mumbai and tsunami in South India have made government realise how important point of care treatment is during such incidents,” says Mr Roy.

Article Resource:Author: Ritwik Donde is the Chief Editor in the The Economic Times, Mumbai and the article appeared in one of their successful columns on Entrepreneurship/Start-ups called "Starship Enterprise".

SO, YOUR startup has become a success and is all set for the growth phase. Good luck, but take care to avoid the following traps.

Underestimating The Cash-Burn Rate

Here’s an all too familiar scenario: Projected revenues start taking off in year five, but it’s only year three, the company is still losing money and it only has 12 months worth of cash in the kitty. Remember: Growth is great, but only if you can survive long enough to watch it kick in. Until then, keep your belt tightened, temper those sales forecasts and make sure customers pay on time.

Misallocating Capital

Once you’ve raised some cash, spending it is all too easy. Too many growing companies end up investing in nonproductive assets, from costly marketing campaigns to fancy new office furniture, while the software they’re selling is still infested with bugs. Best bet: Put a formal system in place whereby any expenditure over a certain amount requires clearance by at least two key people.

Going On An Acquisition Spree

Market share is a good thing, and making an acquisition (or perhaps even forming an alliance or joint venture) can be a way of grabbing it. Shooting stars Cisco Systems and Google successfully inhaled scads of targets in the last decade. But then, those behemoths also used their richly priced shares as currency, making the prices they paid seem a lot more attractive. Sadly, mergers and acquisitions on the whole tend to destroy value, be it because the buyer overpaid or the integration flopped. Tread cautiously.

Forgetting Rules Of Good Customer Service

The first rule is obvious: Don’t be so fixated on winning the next customer that you forget about the ones who already paid and, with any luck, will put in the good word with their friends. But there’s another, less intuitive rule: Don’t be afraid to fire bad customers. These scourges demand lots of service but spend little— or worse, end up not paying at all.

Refusing To Delegate Authority

Sooner than later, a company will grow beyond the core management team’s ability to micromanage it. But learning to let go is harder than it sounds. “There are lots of people that start companies and do very well,” says Paul Marshall, professor of management at Harvard Business School. “But they haven't had to share decision-making authority and responsibility, and they find that hard to do.”

Relinquishing Too Much Equity Too Soon

True, most small businesses fail because they are undercapitalised. But selling off a healthy chunk of ownership and control — either to a venture capital firm or in a public offering — isn’t always the answer to fast cash.

Pocketing A Few Perks

It’s tough running a business, and no one works harder than you. Still, you have to battle the urge to put precious growth capital for that imported car. Investors won't like it — and employees may doubt your commitment to making their financial dreams (read: stock options) come true.

Dippankar Halder, CEO, Spinach talks about the retail chain’s practice of hiring vendors and making them partners in the business’s growth.

Q:IS THE GLOBAL RETAIL FORMAT CONDUCIVE TO THE INDIA SCENARIO?

As a culture, the retail business in India has been flourishing for four thousand years. Commodities are bought and sold here in a certain way and we’re all used to that. The indigenous Indian retail format is much easier and better than firang models. Its not just about putting goods on a shelf, you need ongoing dialogue with the customer, humility and great domain knowledge.

Q:HOW DID THE IDEA OF HIRING PEOPLE FROM THE UNORGANISED SEGMENT AND ABSORBING THEM INTO YOUR BUSINESS COME ABOUT?

At the very inception, we thought that we could hire veterans from the unorganised food sector (fruit, vegetable and fish vendors), and transform them to heads of departments, since nothing can replace the warmth and familiarity of your neighbourhood vendor. But these vendors don’t have great communication skills or aren’t able to manage their environment well enough. So we have hired about a hundred local kiranawalas, trained them in billing, product knowledge, and soft skills and made them responsible for various roles such as distribution, quality control and front-end co-ordination.

Q:WHAT WERE THE CHALLENGES ASSOCIATED WITH THIS?

From the beginning, outsiders raised many questions about the viability of this strategy; they raised questions about sales and customer acceptability issues. There were some integration troubles initially because of technology and documentation issues and emphasis on certain aspects of customer interaction. There was also resistance from the other employees as they were unsure as to how they would get along with the ex-vendors. But their passion and honesty helped alleviate problems and today our staff and the former vendors exchange knowledge and get along freely.

Q:HOW HAS THIS PRACTICE TRANSLATED INTO PROFITS FOR YOUR BUSINESS? DO YOU PLAN TO HIRE MORE VENDORS IN THE FUTURE?

Because the people we take in have extensive domain experience and on-ground experience, they are very good at their work. People like Sheikh Nadir Ali and Partha Mukherjee, who handle the fruits and vegetables and non-vegetarian categories respectively are invaluable to Spinach. And yes, we do plan to get in more people from the unorganised sector in the future.

Article Resource:Author: Nikhil Menon is the Chief Editor in the The Economic Times, Mumbai and the article appeared in one of their successful columns on Entrepreneurship/Start-ups called "Starship Enterprise".

The Indian IT industry is currently witnessing a silent, but very compelling transformation, wherein technology is being viewed as a means to attain business ends, and not an end in itself.

If as developer a product to is he needs being is to developed be clear it in , whom the his mind for why developing , and how it would help the end customer. More than anything else, the focus needs to be on the usability of technology. This calls for a change in terms of the quality of IT manpower. The industry now requires quality brains that can make possible quality deliverance of high-end technical assignments on time and in line with customer requirements. So the pie is gigantic, but grabbing it would remain a dream until the manpower arms itself with adequate skills.

OPERATIONAL DEPTH BECOMES CRITICAL

Indian IT is now being associated with the entire business process, right from developing to the final delivery of a product. For instance, SAP Labs considers Bangalore one of its most important development hubs, since around 10 percent of its patents come from India. Believes Shailesh Shah, Director & Senior VP, Corporate Strategy Group, Satyam Computer Services, “There is greater focus on IT consulting, project management, engineering design and product development leading to substantial revenue streams.”

NOSE FOR BUSINESS IN TECHNOLOGY

So more than just cost effectiveness or technological knowledge, the traits that will set the Indian talent pool apart from other contenders is the ability to understand how the technology they are working on enables business and to think from an entrepreneurial point of view. This means that one needs to be a business technologist to rise in this industry. As Arvind Mishra, Executive VP & Global Head, Talent & Change, Polaris Software Lab Ltd., says, "As the IT industry matures and tries to provide high margin, complex solutions, there is a shift from being purely technical to becoming techno-functional. The software professional today is required to gather domain knowledge. Unlike in the past, when one was called a Java or ‘C’ specialist, the focus today is on whether a person is into banking or healthcare or manufacturing.”

Innovation would be required both in IT services and product development and R&D. Indian IT is already a known name in the ITES space. And in the product development and the R&D space, India has become a hub where the top 10 product companies in the world have set up development centres.

Srinivas Raghavan, VP-MD, Bally Technologies feels quality is becoming the core of Indian services, specially in the area of solution implementation. He says, “The Indian engineer is very good and getting better at implementing solutions on-site wherever the location might be in the world. In future, the number of Indians working at customer locations around the world and implementing solutions for them will only increase.” He feels, nevertheless, that the country should continue to retain its cost advantages.

EXISTING BOTTLENECKS

According to industry estimates, out of a requirement of 2.3 million people, India will fall short by 50,000 relevant IT professionals by 2010. What is to be noted here, is that the fall is not in terms of numbers but in terms of relevance. Only 25 percent of the total technical graduates and 10-15 percent of general graduates are industry-relevant. Added to this, there is no proper grooming of talents at the school/university level.

So what is the way out? Many feel grooming should start at the primary level since logical thinking starts at the primary school level. The need is to address primary education and not build a poor-quality manpower base at the primary level. The industry feels that Indian engineering students, even after four years of studies, are not readily deployable. What’s needed is a close collaboration between the industry, Government and academia to build up a proficient pool that can sustain the growth.

Article Resource:The article appeared in The Economic Times, Mumbai in one of their successful columns on Entrepreneurship/Start-ups called "Starship Enterprise".

Thursday, May 15, 2008

IF YOU want to profit from your pen, first write a bestselling business book. In few other literary genres are the spin-offs so lucrative. If you speak well enough to make a conference of dozing middle managers sit up, your fortune is made. You can, says Mark French of Leading Authorities, a top speaking agency, make a seven-figure income from speechifying alone.

Given this strong motivation to succeed, it is astonishing how bad most business books are. Many appear to be little more than expanded PowerPoint presentations, with bullet points and sidebars setting out unrelated examples or unconnected thoughts. Some read like an extended paragraph from a consultant’s report (and, indeed, many consultancies encourage their stars to write books around a single idea and lots of examples from the clientele). Few business books are written by a single author; lots require a whole support team of researchers. And all too many have meaningless diagrams. The formula seems to be: keep the sentences short, the wisdom homespun and the typography aggressive; offer lots of anecdotes, relevant or not; and put an animal in the title—gorillas, fish and purple cows are in vogue this year. Or copy Stephen Covey (author of the hugely successful ‘Seven Habits of Highly Effective People’) and include a number. Here, though, inflation is setting in: this autumn sees the publication of ‘The 18 Immutable Laws of Corporate Reputation’ by Ronald Alsop. And Michael Feiner has written a book offering ‘the 50 basic laws that will make people want to perform better for you’.

The fundamental problem is that a successful business book needs a bright idea, and they, in the nature of business, come along infrequently. The dotcom boom brought some, the spurs to Clayton Christensen’s ‘The Innovator’s Dilemma’ or Rosabeth Moss Kanter’s ‘Evolve!’ (accompanied by a CD of the guru herself rapping her message). Since then, new books have tended to focus on three areas: corporate governance; leadership; and how to make money out of bits of the business that were forgotten in the boom.

The first category has produced the most meticulous work, with books such as “The Recurrent Crisis in Corporate Governance” by Paul MacAvoy, an academic, and Ira Millstein, a lawyer. Inevitably, many books have raked over the lessons of Enron, WorldCom and other failures, trying to explain what went wrong.

Some of the leadership books are written (or ghost-written) by the likes of Rudy Giuliani or Jack Welch, to describe the secrets of their success. Others explain the mysterious qualities that successful entrepreneurs/leaders display. Warren Bennis’s ‘Geeks & Geezers’, for example, compares different formative experiences on the way to the top. Of course, the most perceptive leadership literature was written 400 years ago by William Shakespeare; and some of today’s most readable books discuss the techniques of past heroes, such as Alexander the Great. They will teach you history, even if they do not make you Jack Welch.

The sheer number of business books means that the diamonds shine rarely in a mound of dross. One industry insider estimates, on the basis of figures from Nielsen Bookscan and a hunch about Amazon’s sales, which Bookscan excludes, that a total of 8m-10m books that could broadly be defined as ‘business’ are sold in America each year. They are almost all written by North Americans: Charles Handy, the Irish author of ‘The Age of Unreason’, is one of the few non-Americans who has managed to break into thismarket.

Including Amazon’s figures, the top 50 business books sold around 4m copies in the first seven months of this year. But many sell fewer than 1,000 in their first year, and the fall-off in sales is almost always dramatic. “The shelf-life of maximum relevance is measured in months,” says Adrian Zackheim, who made his name publishing Jim Collins’s ‘Good to Great’, one of the rare business books that has topped bestseller lists for years.

It is hard to believe that many managers run their businesses differently as a result of their reading. Occasionally, however, a truly great business book will articulate an idea that helps them to explain what it is that they are trying to do. It creates phrases—such as ‘core competence’ or ‘emotional intelligence’ — that fit the moment. But a few lines of ‘Henry IV, Part II’ might well serve the same function, and give more pleasure too.

Sunday, May 11, 2008

Only 1 per cent of the Rs. 1,800 crore online advertising industry in India has been tapped so far. What is the future of this booming industry?

The Rs 1,800 crore online advertising industry throws a huge entrepreneurial opportunity to the creatively enterprising types. You could either create your own online advertising agency, where everything happens online, be it client servicing, ad campaigning, captioning and yes, money making. The start up cost is lesser than that of any traditional advertising agency, and about your target audience, well it’s the whole world!

PLENTY IN STORE

Are there enough opportunities available considering the fact that competition in this booming market is also fierce? But the landscape is changing, as the target audience is transforming its behaviour. Here’s a simple statistic: How much time of the day do you spend on the Internet, and how much of it is occupied in front of the television or reading the newspaper? Probably 8:4? Well, that’s where the space is – the surplus four hours that the viewer spends in front of the computer is on the Internet. Industry statistics say around 70 per cent TV ads are avoided by the viewers, which gives more scope for online ads.

Interactivity too is high while talking about online ads. Traditional ads are more indirect and assumption-based. In case of online communication and marketing, it’s two-way comm unication. Says M Sandeep, Group Head, Account Management of online ad agency Webchutney, “You can exactly track as to how many people clicked on a particular ad, how many people found it interesting and how many of them went a step further. You can also get answers to questions like what is the average age group of Internet users who clicked on a particular online ad, what is it that appealed or didnot appeal to them (by collecting data from the feedback forms they fill in) in a particular ad etc.” The industry numbers gathered through research on online ad industry speak for this optimism.

Although as of today, the online advertisement segment constitutes only 1 per cent of the total $2.2 billion Indian advertisement industry, it shows a promising future. The segment is likely to cross the $100 million mark by 2010!

PRESS ENTER FOR CAREERS

Well, here you get a global audience for your ads, while still spending lesser money than what an international TV ad. India based Ybrant Technologies, a creative service provider to e-marketing, gets 99 per cent of its business from the US. One of the major clients for online ad agencies like Interactive Avenues, constitutes of NRIs and other global citizens. “We are alreadyworking with close to 30 international clients. We are also talking to certain clients in the US and UK who would want to outsource their back-end operations to India especially for search advertising,” informs Ashish Sethia, VP Interactive Avenues Marketing Solutions Pvt Ltd.

Your primary viewer base is that part of the population, which is every marketer’s target – the youth. Pegged currently at 40-45 million, the Internet population is expected to grow to close to 100 million in the next 1- 2 years. A large part of these netizens are within 20-40 age group.Again you have plethora of options to choose from like building websites, display ads which would further include banners, media planning and buying, designing, mobile marketing, email marketing, search engine optimisation and search marketing. You name it and you have it.

YES, I WANT TO VENTURE OUT…..

Well, if you want to start an online ad venture, you need to understand that a market that is relatively new has slightly different nuances. As Sandeep says, “Online ads are more direct and crisp (contentwise and conceptwise). For instance, a Google ad word count has a maximum of 25-30 characters. The design too isn’t very flashy. The logic behind the execution of an online ad is simple. What might look dull as a TV ad might just work well in the format of an online ad.” Hence, the first step towards instituting an online ad venture is acquiring the required skills:Thorough knowledge of the Internet is a must. Niche skills like creativity, inclination towards search marketing, technological know how, understanding of consumer behaviour etc. are also needed.

Planning is extremely important. Questions like ‘what is it that I want to achieve out of a particular campaign’, ‘how can I cater to a cross section of my target group’ and ‘how can I tactfully calculate the ROI’ will arise. The number of questions while conceptualising an online advertisement are multifold.

To start the agency on a small scale, the cost would be around Rs 10 lakh, which would cover the cost of computers, Internet connection, and payrolls. In terms of scope of operations, a minimum of certain skills are required – copywriting, designing, accounting, business developing and technical administration.

THE DAUNTING PART

And now the challenges… For one, the attitude and the approach one has towards the industry hasn’t changed. The unfamiliarity with the new medium, lack of understanding of its reach, fear of venturing into a new area that hasn’t been tappped before are a few reasons that sometimes make it difficult for marketing executives to get clients. As Dr. Subho Ray, President, Internet and Mobile Association of India (IAMAI) opines, “The market at large is still not ready to see the value proposition of online advertisements.”

Constantly keeping pace with the rapidly changing landscape of online advertising is another daunting task. So, one needs to be prepared.

But the above mentioned challenges can be overcome if we understand some of the basic nuances of online advertising and explore various opportunities that this vast industry has to offer.

Article Resource:Author: Jhinuk Chowdhury is the Chief Editor in the The Economic Times, Mumbai and the article appeared in one of their successful columns on Entrepreneurship/Start-ups called "Starship Enterprise".

Saturday, May 10, 2008

A Young and successful entrepreneur can be a charmer or a bungler. It is easy to tell when the person faces venture capitalists. Jacob Cherian sits through a mock deal flow session.

YES. I do.” Those three little magic words that embark a person on the matrimonial pulpit on a journey full of uncertainties and hopefully big rewards. In the world of business, they are very occasionally uttered by venture capitalists to an entrepreneur who had fallen in love with their money. But when they nod, they walk into a relationship as complex as marriage, only with a higher failure rate.

It is quite natural that they relish saying “No, Forget It” much more frequently.Making a neat, quick pitch to potential investors is one of the key skills that an entrepreneur must cultivate. The future of one bright idea or an early stage marvel may very well depend on those few minutes. Venture capitalists will refuse a proposal even if they have a slight doubt about its viability or the business leader’s ability to execute it. In many cases, the refusal may not amount to the rejection of the idea itself, but a safe option for want of conviction.

It is in this context that the event the other day in Mumbai was keenly watched. It had the tone of a high-profile conference or the mood of a law school moot court. It was Red Herring Atre 2007’s final event — Meet the Money — where entrepreneurs faced a panel of three venture capitalists, arguing why they must invest in their businesses.

The learnings were typical of what it takes a startup to succeed in attracting other people’s money and how easy it is to botch it all up. At the ballroom in Taj Land’s End Hotel, the air was thick with the talk of money. Except that none was involved. It was an event where the VC pitches would be heard and decided, but no money exchanged at the end of the day. It was just a game after all, we were told.

But the three entrepreneurs and the venture capitalists were real. Ajay Kumar Kapur, CEO of Sidbi Venture, Promod Haque, managing partner at Norwest Venture Partners and Harshal J Shah, CEO of Reliance Technology Ventures played the potential investors, judging whether the entrepreneurs deserved funding to scale up their operations.

Alex Vieux, CEO of Red Herring, spelt out the rules of the game and acted as the moderator for the evening. Each aspirant had to make a 60-second presentation and answer queries over a fourminute session.

First on stage was KP Vinod, director of BigTec. He sauntered on to stage, probably rehearsing his pitch but wasting some of his 60 seconds. He had a faint smile on his face, almost betraying a casual approach that this is only a game.

Describing his company as a diverse portfolio company, Vinod said, “We fund products ourselves,” and asked for VC funding so his company, in turn, could put the money behind innovative ideas. He went on listing the areas the company was interested in, from software engineering to biochemistry.

The short presentation over, Vieux asked, “How much money are you looking for?” Vinod popped out, “Ten million dollars.”

On being asked about the team, Vinod related the names of all the people involved in the company and who headed which department. “But you’ve said only the names of the team member. That doesn’t tell us anything,” protested a panellist. Then, Vinod went on to relate the names of departments attached to each name. “But what is their background?” an impatient Vieux asked. Vinod was obviously nervous and could muster enough of an answer.

“But you are basically an incubator,” Haque insisted. “For a startup incubator, why are you spreading yourself across three different sectors?”

“We have the option to shut down all the other technologies and focus only on one thing. I think that innovation is a fundamental part of our DNA. And that means we have a pipeline.”

Not much impressed, the panel quizzed him on cash flow and he said his company would go on incubating early stage and late stage innovations. Eventually, the technology would be spun off as a product and money would, one day, surely come in.

Vieux asked the three-member panel to vote. “NO,” “NO” and “NO”.

“Here is the issue,” said Vieux, taking charge of the floor. “When you communicate your value proposition, you make your company seem more unfocused than it is in reality. You are in the bio-tech sector. You are in a very good niche. You want to make it look bigger than it is, and because of that it, seems like you are doing something very fuzzy. And there’s another thing VCs don’t like. VCs don’t like people who do their job with others’ money. It is their job to fund companies and fund innovation. And you are then telling them that you want to take their money so that you can fund innovation. So you are in a genre that they don’t like.”

One of the VCs then took over. “I know someone who relocated from the UK for his company. He said this is all I’m going to focus on. He was like ‘I am either going to make it or break it’. That is the kind of passion and dedication we want to see. If you’ve got that, then you’ve got it. You want to diversify your portfolio for us, remember that we are already good at diversifying. It is better for you to focus on one thing and gain that market.”Vieux continued: “If you are an entrepreneur, burn all your ships.

Don’t worry. If you are going to sink you are going to sink. But burn all your ships. Go for it and go for that one thing that you are good at it. Don’t hedge yourself. If you hedge yourself, it means you are not sure that you are going to succeed. If you want someone to invest in you, you have to be that sure.”

Up next was Netalter. Its vice president for communications, Gurudatt Shennoy, unveiled his wooing plan. “We have some very innovative solutions for the internet. We are developing the Netalter browser. Our mission is to have the Netalter browser on every computing device in the world. We are also looking at having our solutions for the enterprise market. We are talking to a couple of major players in Europe who are interested in our P2P technology. Their clients are interested in this. We will get our revenues from this by licensing our technologies. But we need funding so that we can get the human resources and set up the infrastructure there.”

“With current browsers there are security issues, spam, cookies and privacy. We have a secure P2P technology that we have invented and patented. This will create an opportunity for a more organised network than the current network.” This was Shennoy.“Do you have beta customers?”“No. That is why we are seeking funding. Because we believe that we can come out with our product within three months. The key thing would be to get them to shift over to this. It could be for e-commerce or social networking or other such things.”“Who will be your beta customer?” the panellists wanted to know.“People who are not satisfied with the internet. People who feel that their time is wasted on the Net. For instance, I get a lot of spam in my mail and it wastes my time. It would be for both individuals as well corporates. The basic browser would be free. For the corporate to work on the browser, it can be customised.”

Then came the inevitable question: “How will you get your revenue if you offer it for free?”

And then the familiar answer. “We want to create the market first. We are already tied up with content providers. When we launch we will tie up with job-portals, travel sites and such like.”

“Who are your competitors?” asked the VCs. “There are no specific competitors currently. However, as we develop up all the big companies will develop similar technologies. We will have a search engine, a browser. The P2P platform can be converted into a grid. We call it a democratic grid. If you participate in the grid, you can use it to search for information using other computers as well. The results can also be outputted on your mobile phone.”

Clang, and it was time up. Again, all the three said No. However, Kapur did seem a bit interested and said “No as of now, but possibly with another round of discussion. I still do not have clarity on what this is about.”

Shennoy attempted a quick exit with a “Thank you” but Vieux cut him off and said, “Don’t go. Time to debrief. Don’t be too intelligent for your own good. You are trying to hedge. You have a first product and a second product and a whole lot of other things. My advice to you is to do one thing and do it well. People don’t understand why you have different things. This communicates a lack of focus and VCs don’t want to see that. This makes you too intelligent for your own good. You ought to focus on creating differentiated value.”

The final aspirant was from MAIA Intelligence. “You have had companies before you and the VCs are used to saying no,” Vieux said welcoming CEO Sanjay Mehta. A confident Mehta was unruffled. “Let’s see if we can change that.” Meanwhile, pamphlets describing MAIA’s product were being distributed among the VCs.

“We are in the intelligence space. My background: I am a serial entrepreneur with four startups behind me,” Mehta said. “We entered this space as we saw that people have issues in reporting their progress on the operational front. We saw that they typically use excel or people are writing queries. So we decided to target this space. We already have this product out and some of our clients are Reliance Capital, Edelweiss Capital. With one of our clients, we have 1,200 users. We are looking at becoming the largest BI user base in India. We have just got our first customer in the US,” he says.

“Are you looking for money?”“We are looking for $15 million as we are looking at marketing and branding, not product development.”

Reliance Tech Ventures’ Shah asked, “How much of your revenues comes form Reliance?”“We have 37 customers and one of them is Reliance. And every deal is around (Rupees) 9 lakh each,” Mehta replied.“Can you tell me about your team?”“We are six people. Totally we are two chartered accountants, three on the technical side and one on the alliance side.”“What are your plans for the $15 million? How are you going to take it?” the VCs asked.

“We can take it $5 million at a time . The product is already ready. We need the funding to take it to market.” At this point, Vieux interrupted.“Twenty years ago I used to work with enterprise software. My first company went public. From that experience, I know you don’t need that much capital.”Then, Kapur asked the entrepreneur what was the market size for a product like the one being described. To which, Mehta began citing a Gartner study but Kapur cut him off and asked, “What is your number?”

Mehta conceded that he didn’t have a number, but “by 2009 March, we should have 400 customers with an average deal size of Rs 15 lakh.”Time for the final vote of the day. And at last, those magic words of approval were heard. Shah of Reliance Tech Ventures said. “Yes, but I want to qualify my ‘yes’ because I would always like to look at a company that has managed to sell to Reliance. I know how strict Reliance is when deciding a purchase. Also, I’ve seen a domino-effect happen with other companies in the past. Get Reliance as a customer and their competitors want to have a look at you.’

“Yes, this is true,” said an obviously relieved Mehta.Haque then gave his verdict. “No. I would not invest in a company that is built around a reporting product. I have experience in this field myself.”And thus ended a session that saw virtually every trick in the book that wouldn’t work while talking to venture capitalists. As a parting advice to Mehta, Vieux said: “When you go and talk to a venture capitalist, do your homework. For God’s sake, do your homework. Come out with market size, numbers, percentages, your plan of action, your team. Be crystal clear and crisp. You aren’t prepared even though you knew that you had to make this presentation for the past few days. When you talk to those people, you need to be prepared with your numbers. You have three things going for you: You are a repeat entrepreneur. The second thing is that you have a proof of concept that is selling and you sold to one of the most difficult companies. Finally, you are at the right place at the right time in business intelligence space.”

Article Resource:The article appeared in The Economic Times, Mumbai in one of their successful columns on Entrepreneurship/Start-ups called "Starship Enterprise".

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